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Investors' Guide to Targa Resources' (TRGP) Dividend Hike
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Leading midstream provider Targa Resources Corp. (TRGP - Free Report) recently got approval from its board of directors to increase the quarterly dividend by 25 cents (or 50%) to 75 cents per share, which translates into $3 per share on an annualized basis. The new payout will be made on May 15 to its common shareholders of record on Apr 30.
TRGP continues to execute across strategic priorities, thanks to volume gains across its infrastructure footprint, to go with strong business fundamentals and increasing earnings stability. This positive backdrop, together with Targa Resources’ strong returns, investment grade balance sheet and improving cash flow outlook, allowed the Zacks Rank #3 (Hold) midstream operator to reward investors with a dividend hike last week.
While stock buyback is another preferred tool for TRGP to distribute cash, the company’s policy dictates that it ploughs back cpital by growing common dividends meaningfully. Targa Resources’ current dividend yield of 2.6% might not be the best going around, but it is well ahead of the S&P 500’s 1.3% and is well protected with a payout ratio of 52. As a result, the dividend not only looks quite sustainable but also leaves enough scope for future hikes.
In a volatile energy market context, a dividend increase serves as management’s signal of confidence in the company's prospects. By elevating the dividend, management is essentially expressing the belief that forthcoming cash flows will be sufficient to cover the increased dividend.
Targa Resources is a leading provider of integrated midstream services in North America. The Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas. Targa Resources also provides services associated with natural gas liquids (“NGL”), including those to liquefied petroleum gas (“LPG”) exporters, and crude oil.
Meanwhile, TRGP is not the only energy company that recently announced a dividend increase. Here are some other firms that did the same:
Phillips 66 (PSX - Free Report) said on Apr 3 it will pay out a cash dividend of $1.15 per share of record on May 20. The company’s dividend represents a 10% increase to its quarterly dividend rate, providing an annualized dividend of $4.60 per share. At yesterday’s closing price, investors get a dividend yield of 2.8%.
Magnolia Oil & Gas (MGY - Free Report) is another energy operator that deserves mention. MGY increased the quarterly dividend by 13%, from 11.5 cents to 13 cents. This payout increase came into effect with the dividend recorded on Feb 16. At the current share price, Magnolia offers a dividend yield of 1.9%.
Then there is HighPeak Energy (HPK - Free Report) , The Fort Worth, TX-based HPK announced a quarterly dividend of 4 cents, taking the full-year payout to 16 cents, up 60% from the previous dividend. The new dividend, which offers a yield of 1%, was paid to stockholders of record on Mar 1.
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Investors' Guide to Targa Resources' (TRGP) Dividend Hike
Leading midstream provider Targa Resources Corp. (TRGP - Free Report) recently got approval from its board of directors to increase the quarterly dividend by 25 cents (or 50%) to 75 cents per share, which translates into $3 per share on an annualized basis. The new payout will be made on May 15 to its common shareholders of record on Apr 30.
TRGP continues to execute across strategic priorities, thanks to volume gains across its infrastructure footprint, to go with strong business fundamentals and increasing earnings stability. This positive backdrop, together with Targa Resources’ strong returns, investment grade balance sheet and improving cash flow outlook, allowed the Zacks Rank #3 (Hold) midstream operator to reward investors with a dividend hike last week.
You can see the complete list of today’s Zacks #1 Rank stocks here.
While stock buyback is another preferred tool for TRGP to distribute cash, the company’s policy dictates that it ploughs back cpital by growing common dividends meaningfully. Targa Resources’ current dividend yield of 2.6% might not be the best going around, but it is well ahead of the S&P 500’s 1.3% and is well protected with a payout ratio of 52. As a result, the dividend not only looks quite sustainable but also leaves enough scope for future hikes.
In a volatile energy market context, a dividend increase serves as management’s signal of confidence in the company's prospects. By elevating the dividend, management is essentially expressing the belief that forthcoming cash flows will be sufficient to cover the increased dividend.
Targa Resources is a leading provider of integrated midstream services in North America. The Houston, TX-based operator primarily derives its revenues from gathering, compressing, treating, processing and selling natural gas. Targa Resources also provides services associated with natural gas liquids (“NGL”), including those to liquefied petroleum gas (“LPG”) exporters, and crude oil.
Meanwhile, TRGP is not the only energy company that recently announced a dividend increase. Here are some other firms that did the same:
Phillips 66 (PSX - Free Report) said on Apr 3 it will pay out a cash dividend of $1.15 per share of record on May 20. The company’s dividend represents a 10% increase to its quarterly dividend rate, providing an annualized dividend of $4.60 per share. At yesterday’s closing price, investors get a dividend yield of 2.8%.
Magnolia Oil & Gas (MGY - Free Report) is another energy operator that deserves mention. MGY increased the quarterly dividend by 13%, from 11.5 cents to 13 cents. This payout increase came into effect with the dividend recorded on Feb 16. At the current share price, Magnolia offers a dividend yield of 1.9%.
Then there is HighPeak Energy (HPK - Free Report) , The Fort Worth, TX-based HPK announced a quarterly dividend of 4 cents, taking the full-year payout to 16 cents, up 60% from the previous dividend. The new dividend, which offers a yield of 1%, was paid to stockholders of record on Mar 1.